Mumbai: Marcellus Investment Managers Pvt. Ltd., India’s leading portfolio management company, has launched Marcellus MeritorQ, a unique quant-based fund designed to deliver superior risk-adjusted returns to retail investors.
MeritorQ requires a minimum investment of Rs 10 lakh. The product aims to create a diversified portfolio comprising 35-45 stocks across large, mid, and small-cap segments. The fund will be benchmarked against Nifty 500TRI .
This portfolio is built on an internally developed rule-based system to identify good quality, undervalued companies from a large universe of listed stocks. A quant approach is best suited to avoid behavioural biases and prefer process over discretion in building a long-term winning portfolio of stocks with high return on capital, solid financial condition, and clean accounts
Back testing MeritorQ over a 16-year period from July 2006 to August 2022, the fund delivered 20x returns compared to about 7.3x times for Nifty 500 TRI. MeritorQ has observed lower drawdowns and faster recovery during extremely volatile market conditions.
Speaking on the fund, Saurabh Mukherjea, chief investment officer of Marcellus Investment Managers said, “Many small retail investors have long desired that Marcellus brings a product into the market which requires a small-sized investment. By taking a quantitative and rule-based approach to investment decisions, MeritorQ is presenting investors with a viable option to help them realise their long-term goals.”
Krishnan V R, the investment adviser for MeritorQ said – “MeritorQ is a rules-based strategy with a focus on fundamentals. MeritorQ follows Marcellus’ uncompromising approach in buying high quality companies with clean accounts and those which are relatively undervalued. The strategy is suitable for investors with an investment horizon of at least three years.”
The key features of MeritorQ are:
▪ The portfolio construction methodology have been rigorously tested across 16 years of history and has delivered consistent performance across various market cycles on the back of 50% average annualized turnover.
▪ Relies on Marcellus’s forensic framework to screen for companies with clean accounts
▪ Combines uncorrelated factors like quality and value to deliver superior returns with lower downside risk. The strategy has had lower drawdown than benchmark both during the 2008 Global financial crisis and the March 2020 Corona market crash.
The fund will be rebalanced and reviewed semi-annually on the first trading day of April and October.